Software Equity Group is an investment bank that puts out research on SaaS markets. They recently released their Q3 report. A summary is below but the full report may be found at https://softwareequity.com/research/.
M&A activity is strong. “SaaS M&A hit a record high in 3Q25 with 746 transactions, up 26% YoY from 594 in 3Q24, marking the strongest quarter SEG has tracked. YTD deal count surpassed 2,000, putting 2025 on pace to exceed 2,500 total deals. This momentum reflects demand for quality SaaS assets, improved financing conditions, and renewed supply after two muted years. Driven by both strategics and sponsors re-engaging in high-volume dealmaking, SaaS has solidified its role as the dominant driver of software M&A”
Multiples are consistent. “SaaS M&A valuations held steady in 3Q25, with a median EV/TTM revenue multiple of 4.1x and an average of 5.4x. Despite quarterly variability, valuation levels have remained within a consistent 4x to 6x range.”
Private equity volume is the majority. “Sponsor involvement remained strong in 3Q25, with PE/VC-backed buyers accounting for 58% of all SaaS transactions, consistent with long-term trends averaging above 55% since 2020.”
Verticals. “Vertical SaaS accounted for 54% of total SaaS M&A in 3Q25, up from 43% in 3Q24, underscoring investor demand for mission-critical, workflow-embedded solutions.” But that also means nearly half the deal flow is generalist SaaS, so being verticalized isn’t a must.
Our view: This is the steady state market for software, reminiscent of a pre-covid environment. The great multiples we saw in late 2021 and early 2022 are gone, but the current market is more akin to what we saw in 2018/2019. We’d call it healthy. Big thanks to SEG for putting the data together. Please reach out to them to learn more about their investment banking practice.
Thank you for your readership. Visit us at blossomstreetventures.com for more SaaS data and blogs. Email the author at sammy@blossomstreetventures.com
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